KEY POINTS
- BMI raises 2026 lithium price forecasts to $20,100/t for carbonate and $19,600/t for hydroxide.
- Strong energy-storage demand is expected to prevent a major lithium price crash.
- Zimbabwe and Argentina are emerging as important new sources of global lithium supply.
BMI, a Fitch Solutions company, has raised its 2026 lithium price forecasts, citing stronger-than-expected demand from the energy storage sector and continued momentum in the lithium market during the first half of the year.
The research firm now expects mainland Chinese lithium carbonate prices to average about $20,100 a tonne in 2026, while lithium hydroxide monohydrate is forecast at $19,600/t. The revised forecasts reflect stronger price performance than previously anticipated.
Despite expectations that lithium prices will ease during the second half of the year, BMI believes demand from battery energy storage systems will provide an important floor for prices and reduce the risk of a major market downturn.
The firm said uncertainty surrounding the potential restart of Contemporary Amperex Technology Limited’s (CATL) Jianxiawo lithium mine in China could also limit negative market sentiment.
BMI nevertheless cautioned that lithium prices remain vulnerable to concerns about oversupply. It expects the market to remain caught between strong demand fundamentals and rising production, with the balance of risks still tilted towards lower prices over the longer term.
EV Growth Slows as Market Becomes More Mature
BMI forecasts global lithium demand to grow by 5.8% year-on-year in 2026, significantly slower than the 18.5% growth recorded in 2025.
Global passenger electric vehicle sales, including battery-electric and plug-in hybrid vehicles, are expected to increase by 3.9% this year. This compares with much stronger growth of 22.8% in 2025 and 24% in 2024.
China remains the dominant market for electric vehicles and lithium demand. New-energy vehicle sales in the country rose 23.6% year-on-year and 9.8% month-on-month in June, reaching 1.6-million units.
New-energy vehicle penetration also reached a record 58.5% of total new-vehicle sales for the third consecutive month.
BMI said the Chinese market is gradually moving from a rapid-growth phase towards a more mature environment, particularly as government purchase incentives are withdrawn and structural pressures increase.
The continued adoption of lithium iron phosphate (LFP) batteries is expected to keep lithium carbonate prices above lithium hydroxide prices.
LFP batteries now account for more than half of electric vehicle batteries and more than 90% of battery energy storage applications, according to BMI.
Higher fuel prices linked to the conflict in the Middle East could also encourage consumers and businesses to adopt more fuel-efficient vehicles, including EVs, plug-in hybrids and conventional hybrids.
BMI said a sustained shift in consumer preference towards these vehicles could provide an additional upside for lithium demand.
On the supply side, BMI expects global lithium production to increase by 13.2% in 2026, driven mainly by Australia and China.
Higher energy costs and a possible sulphur shortage could put pressure on mining margins. However, the recovery in lithium prices could encourage producers to increase output and potentially restart higher-cost operations, particularly in Australia. Over the longer term, BMI expects the global lithium supply landscape to become more diversified.
